Desjardins to acquire State Farm assets

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Reuters

Jan 15, 2014

, Last Updated: 2:08 PM ET

TORONTO - Canada's Desjardins Group said on Wednesday that it would buy State Farm Canada's businesses in property and casualty and life insurance, as well as its Canadian mutual fund, loan and living benefits companies.

The value of the transaction was not disclosed.

The deal would transform Desjardins into the second-largest property and casualty insurance provider in Canada, with annual gross written premiums of about $3.9 billion, the Quebec-based co-operative financial group said.

The deal, which is expected to close early in 2015 following necessary regulatory approvals, would put Desjardins behind Canadian property and casualty market leader Intact Financial Corp., which operates under its own name as well as brands including Grey Power and Belairdirect.

As part of the deal, State Farm will invest $450 million in Desjardins Group's property and casualty insurance business after the deal closes. That business also has commitments for investments of $200 million from French co-operative financial group Credit Mutuel and about $700 million from Desjardins itself.

Separately, Desjardins said some of its other subsidiaries were allocating $250 million in capital toward supporting the life insurance, mutual fund, loan and living benefits segments.

"This acquisition will allow Desjardins to develop a broader, multi-channel distribution network across the country," Chief Executive Officer Monique Leroux said in a statement.

Once the deal closes, State Farm's 1,700 Canadian employees and its network of more than 500 Canadian agents will continue to serve more than 1.2 million customers in Ontario, Alberta and New Brunswick, the companies said in a joint statement.